Books, Berkeley and Brazil--even after 500 years, it is still all about distribution:

Let’s begin at the risk of being trite—modern copyright began with the invention of the printing press and the ability to make multiple copies of a single work. Sometimes, however, we forget that mere mass production of content was not enough to transform the book into a commercial proposition. In addition to production, the book had to be distributed in some manner. Without effective distribution, the printing press and its aftermath would have been of little commercial importance. It is popularly observed that the digital online environment has brought together production (or at least reproduction of content) with distribution, whereby content can be reproduced and then digitally distributed in a seamlessly connected manner. While this is of course true, there is an element of over-simplicity in viewing digital online distribution in such a stripped down fashion. The reality is often more nuanced, as evidenced in two recent news items, the first about distributing science research contents and the second about the commencement of the sale of Kindle readers in Brazil. Let’s look at each in greater detail.

“The way scientific journals are run” was the focus of an article, entitled “What’s wrong with Science”, that appeared in the December 14, 2013 issue of The Economist, here. The gist of the piece is that Professor Randy Schekman, of the University of California, Berkeley, and a co-winner of the 2013 Nobel Prize in Medicine, here, has announced that he will henceforth “boycott” what he terms “luxury journals”, such as Cell, Nature and Science. Sheckman’s dissatisfaction with these journals is two-fold. First, he claims that they ‘artificially” limit the number of papers that they accept for publication in order to stoke demand by creating false scarcity, à la “limited-edition handbags”.

In so doing, this false scarcity serves the interests of the journals by enhancing journal subscriptions, but at the social cost of not necessarily publishing the best current research. Second, these journals help distort the enterprise of science by perpetuating the “tyranny of the ‘impact factor’ ”, which is a value that purports to show how “important” a given journal is (emphasizing “hype and faddishness”, and rewarding “who is first” rather than “who is thorough”).

It has to be noted that Schekman also edits eLife, here, an open-access journal (which means inter alia that readers are not charged) that seeks to compete with the glitzy likes of Cell, Nature and Science. The eLife journal is being supported by a number of established science charities. The premise of the journal is that scarcity of publication space is no longer limited by the number of pages in a physical copy. Freed from commercial distortions, it is claimed, eLife can better serve the scientific community by making available more quality research papers.

The second item appeared on February 7, 2014, on Reuters.com. Entitled “Amazon tests Brazil’s retail jungle with its Kindle”, here, the article describes how Amazon has begun to sell Kindle e-readers online. Note carefully, we are not speaking about the contents of the Kindle e-reader, which continue to be delivered digitally online, nor bricks and mortar stores, where a customer can purchase a Kindle reader. Rather, what Amazon seeks to do is take online orders for the sale and distribution of the device itself. This means that Amazon must find a way of delivering the e-reader to customers throughout the vast territory of Brazil, 200 million residents strong. Interestingly, shipment of the Kindle will be free and customers will be able to pay off the e-reader in up to 12 instalment payments (though the mark-up, if any, in paying for the device on an instalment basis was not specified). In so doing, Amazon is taking head-on the challenges posed by the well-known logistical and transportation problems in Brazil, not to mention high labour costs and rigid labour law provisions as well as an oppressive tax regime. Indeed, unlike in the U.S., where Amazon relies on its own distribution network and warehouses, in Brazil, Amazon will rely on distribution of Kindle devices through what are described as “external partners”. No further details were provided about the identity of these external partners.

So what do we make of these items? As for Professor Schekman and the eLife journal, we see an attempt to break the alleged privileged position of the elite science journals and the false scarcity that they allegedly create in publishing science research, while at the same time “democratizing” the distribution of worthy scientific research. Lurking behind this effort, however, is really a tale of trade marks and goodwill. The “impact factor” is both a cause and result of the goodwill enjoyed by the elite commercial journals. The challenge of Schekman and his associates is to neutralize the goodwill enjoyed by these journals, or at least to create sufficient goodwill in the eLife journal so that it can effectively compete. Aiding this effort is the reputation that Schekman enjoys by virtue of his Nobel Prize award. Seen in this light, what appears to be a matter of finding a better way to distribute the contents of scientific research becomes a battle over establishing viable goodwill in the online publishing project.

As for the sale of the Kindle online in Brazil, the focus is not directly on the distribution of the contents per se, but the distribution of the device necessary to read online content that is accessed and stored on the e-reader. The centrality of the device in the distribution of literary content can be seen, in some sense, as an extension of the home computer (and later the laptop and the tablet). However, none of these devices, being general purpose computer machines of various kinds, is solely dedicated to accessing stored literary contents. Moreover, the special challenge of distributing content digitally is joined with the long-standing problem of physically distributing the e-reader to far-flung customers Seen in this way, Kindle’s initiative in Brazil constitutes a new form of distribution of content, reaching back to the dawn of the age of the printing press and the challenge then, and now, of how to get this content into the hands of readers.

Take Control of Student Loan Debt

According to the Federal Reserve, student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008. The latest Fed reports states, “Balances of student loans have eclipsed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages.” The Fed keeps an eye on these numbers to determine their impact on the nation’s overall economic growth. On an individual level, most student loan holders are well aware of the direct impact on their lifestyle. A significant portion of their income has to be allocated toward student loan debt payments. That means less money for other expenses like mortgages, automobiles and daily living. Since lenders consider debt/income ratios, borrowers with high student loan debt may be denied loans or face higher interest rates.
Student loan debt does not magically go away. So, the best strategy is to take action. Find out exactly how much you owe and the type of loan – federal or private. You can retrieve information about federal student loans at  www.nslds.ed.gov . In the case of federal student loans there are many types of repayment options. A repayment and comparison calculator to help you analyze those options is available at www. studentaid.gov  .  If you are employed in the public sector investigate the Public Student Loan Forgiveness program. Try to avoid delinquencies and default. These options can be costly and can  lead to wage or other types of garnishments.

Special issue of Cultural Studies

Everyday Debt and Credit: Special Issue of Cultural Studies

CULTURAL STUDIES

Special Issue: Everyday Debt and Credit

Co-edited by Gregory J. Seigworth (Millersville University) and Joe Deville (Goldsmiths, University of London)

 

Call for Papers

 

How do ordinary matters of credit and debt circulate through the space-times of the everyday and the intimate? How has their manner of circulation and the nature of their saturation into the lives of borrowers changed in the age of the app, of the mobile interface, of social media? What are the new technologically enabled effects of debt and credit? Where and how is everyday indebtedness felt by its users and inflected in and through the architectures and atmospheres surrounding them? And, further, what are these postures and practices of our emerging economy of debt and credit pointing toward? From the advent of digitally mediated peer to peer lending to credit scores consulted on first dates (calculating risk before date #2), from cloud-connected loyalty cards to mobile payment and wallet technologies, from the multi-pronged and carefully designed affective tactics of debt collectors to the strategies of gamification for savings and personal finance and more – the material and immaterial articulations of debt and credit have woven themselves ever more ubiquitously into the ecologies of the everyday. If the sheer pervasiveness of credit and debt has become a defining feature of our era, we argue that their omnipresence cannot be confronted as merely one more topic for consciousness-raising and ideology critique. From the data-defined subjectivities of instantaneous algorithmic calculations to those age-old debates over the moralities and immoralities of debt to the emergence of redrawn bodily capacities (extended? shrunken?) and institutional/networked accesses (granted? denied?) that arise with evermore technologically-mediated credit/debt relationships, our contributors will reveal how matters of credit and debt must be met in their myriad relational entanglements with both the fine-grained and roughhewn practices of daily life.

 

Thus, we welcome essays that provide an empirics of indebtedness as it traverses this varied social and material terrain of the everyday. This includes a contextual focus on the specific apparatuses, devices, encounters, dispositions and affects of routine indebtedness and how different forms of credit reach into and attach themselves to domains often coded, as private, domestic, mundane, and non-economic. In attending to the particularities of daily intersections with credit and/or debt contributions might also consider how these mundane mediations of the economic connect to and shape apparent contextual commonalities, how the politics of ubiquitous credit is distributed, and where and in what form resistances, hacks and new debtor publics might be found. The issue aims to be disciplinarily diverse, to potentially include sociologists, anthropologists, philosophers, political economists, cultural theorists, critical analysts of finance, and those working in science and technology studies, while also inviting contributions from designers, architects, managers and activists. We welcome diverse and innovative takes on everyday indebtedness, ranging from (but not limited to) auto-ethnographic accounts to those investigating through a mix of sensory and/or digital approaches to credit & debt practices.

 

Please contact the editors with a proposal of 500 words presenting an orientation/overview of your angle of approach to this topic by February 15, 2014. Finished articles are also welcome at anytime but of course slight revisions to better address our issue’s themes should be expected.

 

Final full paper submissions are due no later than July 15, 2014. Articles are generally between 5000-8000 words (double spaced, size 12 font), including abstract and references. An abstract of 300 words (including 6 keywords) must be included for purposes of journal review. Please supply an email address and other relevant contact information with your submission. Multi-author works should clearly designate a corresponding author. Manuscripts must conform to the Harvard reference style. Consult the journal’s Taylor and Francis website for further specifics on formatting and author guidelines.

 

Send any inquiries, comments, proposals and papers to both co-editors: Gregory Seigworth

The Performativity of Strategy, Call for Papers – Special Issue of Long Range Planning

Special Issue Guest Editors:

Laure Cabantous, Cass Business School, City University London

Jean-Pascal Gond, Cass Business School, City University London

Alex Wright, The Open University Business School

Deadline for submission of 1000-word long abstracts: 30 September 2014

Deadline for submission of papers to the Special Issue: 15 March 2015

Contact details: performativity.strat@gmail.com.

 The Performativity of Strategy
Although it is widely acknowledged that strategy matters to society and has multiple effects on organizations and markets, the processes whereby strategic ideas, theories and models influence individuals, organizations and markets remain under-studied. In addition, despite extensive research on strategy, we still know little about how strategy theories “work” in practice. This special issue is a forum to study the performativity of strategy and to answer the following questions: How and why are strategy theories and concepts used and “performed” in practice? What are the implications and impact of the performativity of strategy?
We would like management scholars to engage thoroughly with Michel Callon’s idea that economics and management theories are performative, that is they perform and shape the external world. However, we also consider that other conceptualizations of performativity – such as the conceptualization developed by the Communicative Constitution of Organization perspective, Barad’s post-humanist approach to performativity, or the concept of performative praxis – offer promising avenues to address these questions. The purpose of this Special Issue is to engage scholars who have an interest in the discursive, social-material or practice-based dimensions of the performativity of strategy. We will therefore consider conceptual and empirical manuscripts as long as they explicitly mobilize one (or several) conceptualizations of performativity and they seek to create a new body of knowledge concerning the relationships between strategy theories and practice. We also welcome manuscripts that critically reflect on strategy theories’ influence on organizational reality.
We encourage papers from researchers and practitioners that address, but are not limited to, the following topics:
*  How and to what extent does strategic management acquire the power to shape organizational life and the organizational field? Are strategy theories self-fulfilling prophecies? Can strategy be approached as performative praxis—a set of activities that contribute to turning a theory into social reality?
* How are some strategic management frameworks and tools such as Porter’s five forces framework, Barney’s VRIN model or Freeman’s stakeholder theory more performative than others?
* How do performativity struggles between alternative models or theories of strategy in organizations emerge? For instance, how do strategy theories compete with economic representations of the firm, financial models (e.g., real option modelling) and theories, models and concepts from other disciplines (e.g., decision theory, sociology, ecology) to shape organizational strategies?
* How do academics and practitioners interact (or compete) when designing or diffusing innovative strategic concepts, such as the Bottom of the Pyramid, Blue Ocean Strategy, Coopetition or the Red Queen Effect?
* If business models are models encapsulating an organization’s strategy, to what extent are these models “performative”? Where does the performative power of business models come from?
* How are strategy and management consultants, and other professionals involved in the performativity of strategy?

 In responding to this call, we particularly welcome empirical contributions that document the concrete and practical effects of strategy theory. In terms of methodology, we welcome submissions in which a variety of research strategies and methods for collecting and analysing data are used.

 Process and Deadlines

Stage 1: Submission of a 1000-words abstract by 30 September 2014

Please submit an extended abstract or a clear expression of interest to the guest editors by 30 September 2014 at the email address that follows: performativity.strat@gmail.com. All abstracts will receive a first screening and feedback by the guest editors who will encourage authors of promising abstracts to submit full manuscripts to the Special Issue.

Stage 2: Papers for the special issue will have to be sent by 15 March 2015

Papers for the special issue should be prepared according to LRP’s guidelines for authors (www.lrp.ac). Papers will undergo a normal reviewing process. Please submit full manuscripts to the online submission system of LRP before 15 March 2015:

http://ees.elsevier.com/lrp/default.asp

 Should you have any questions about the Special Issue process and deadlines, please contact the guest editors at performativity.strat@gmail.com.

30 September 2014 Submission of abstract

15 October 2014 Notification to authors regarding their abstract submission

15 March 2015 Submission of full paper to Long Range Planning

Winter 2016 Intended publication of Special Issue

Suggested References

Barad, K. 2003. Posthumanist performativity: Toward an understanding of how matter comes to matter. Signs: Journal of Women in Culture and Society, 28(3): 801-831.

Barad, K. 2007. Meeting the Universe Halfway: Quantum Physics and the Entanglement of Matter and Meaning: Duke University Press.

Cabantous, L., & Gond, J.-P. 2011. Rational decision-making as a ‘performative praxis’: Explaining rationality’s éternel retour. Organization Science, 22(3): 573-586.

Cabantous, L., Gond, J.-P. & Johnson-Cramer, M. 2010. Decision theory-as-practice: Crafting economic rationality in organizations. Organization Studies, 31(11): 1531- 1566.

Callon, M. 1998. The Laws of the Markets. Oxford: Blackwell Publishers.

Callon, M. 2007. What does it mean to say that economics is performative? In D.MacKenzie, F. Muniesa, & L. Siu (Eds.), Do Economists Make Markets? On the Performativity of Economics. Princeton University Press.

Cochoy F., Giraudeau M., McFall L. 2010. Performativity, economics and politics: An overview, Journal of Cultural Economy, 3(2): 139-146.

Cooren, F. 2004. Textual agency: How texts do things in organizational settings. Organization, 11(3): 373-393.

Doganova, L., & Eyquem-Renault, M. 2009. What do business model do? Innovation devices in technology entrepreneurship. Research Policy, 38(10): 1559-1570.

Ferraro, F., Pfeffer, J., & Sutton, R. I. 2005. Economic language and assumptions: How theories can become self-fulfilling. Academy of Management Review, 30(1): 8-24.

Ghoshal, S. 2005. Bad management theories are destroying good management practices. Academy of Management Learning & Education, 4(1): 75-91.

Hardy, C., Palmer, I., & Phillips, N. 2000. Discourse as a strategic resource. Human relations, 53(9): 1227-1248.

MacKenzie, D., & Millo, Y. 2003. Constructing a market, performing a theory: the historical sociology of a financial derivatives exchange. American Review of Sociology, 109(1): 107-145.

Orlikowski, W., J., & Scott, S. V. 2008. Sociomateriality: Challenging the separation of technology, work and organization. Academy of Management Annals, 2(1): 433-474.

Vaara, E., Sorsa, V., & Pälli, P. 2010. On the force potential of strategy texts: A critical discourse analysis of a strategic plan and its power effects in a city organization. Organization, 17(6): 685-702.

Ingestion without indigestion: a good year for Rightscorp

2013 seems to have been a good year for Rightscorp, Inc., which in a recently-received press release describes itself as "a leading provider of monetization services for artists and holders of copyrighted Intellectual Property". The company reported revenues for its fourth quarter which, at $155,381 were up 194% over $52,739 in the same period last year. Revenues for the full year 2013 were $324,000, up a remarkable 236% from $95,565 for the full year 2012. Explains the company:

"The growth in revenues was driven by the Company’s ability to increase the amount of copyrights in its automated system by 135% from approximately 17,000 in the fourth quarter 2012 to more than 40,000 in the fourth quarter of 2013".

According to Robert Steele, COO:

“... We currently have over 1 million copyrights under contract and we are loading thousands more every month. Our operational model is proving its ability to scale into a large and successful business as we help collect on behalf of artists and copyright holders. The increase of our ingestion rate will be our primary focus as it is a direct revenue driver in hand for 2014. We can expect our $750,000 annual revenue run rate to accelerate as we are at 4% of our copyrights under contract ingested. Additionally, increases in the number of ISP’s forwarding our notices should further drive our growth rate and increase revenues. 

“The metrics are clear. As we continue to ramp up our copyright inventory, we expect our revenues to increase proportionally. To date, we have closed on more than 50,000 cases of copyright infringements, and we have paid the owners of those copyrights for their work. We are currently in talks with the owners of millions of additional copyrights. Rightscorp is pleased to offer a technology and an operational system that enables the creators and owners of intellectual property to be rightfully compensated for the use of their assets.” 

This blogger notes that neither IP Finance nor the copyright-oriented 1709 Blog has featured Rightscorp before and he is also slightly embarrassed to confess that he cannot recall having come across it before. Do any readers have experiences of it, whether from the perspective of rights owners or from that of being on the receiving end of its attentions? If so, do let us know.

So, What Are Annuities?

Annuity contracts are purchased from a life insurance company. The buyer gives the company a lump sum or a series of payments. In return the company will provider the consumer with a stream of payments. Annuities are classified as immediate or deferred annuities. Immediate annuities start making payments within a year. Deferred annuities stipulate payments in a more distant future –such as 10-20 years.
An immediate annuity is purchased as a way to avoid the risk of outliving assets in retirement. It is paid for with a lump sum payment. In return the insurance company starts making scheduled payments. The payments can be structured for the life of an annuity owner or an owner and his/her spouse. The risk of depleting the asset amount is transferred to the insurance company and the company charges fees to assume this risk.
Deferred annuities are a tax advantaged vehicle used to accumulate funds for retirement, so there are penalties for withdrawals prior to age 59.5. Most workers first look to workplace retirement plans and Individual Retirement Plans before deferred annuities. These plans can offer tax deductions and may have less fees.
Like all investments, annuities have advantages and disadvantages. One of the advantages is that earnings grow tax deferred until withdrawals are made. A disadvantage is that if you need to access funds before the payment time stipulated in the contract there will be a surrender charge. In addition, fees & expenses may be higher than other investment vehicles.
For more information view our recorded webinar, “Annuities 101” at http://bit.ly/19h7VQT

How Much Should We Spend?

There are many rules of thumb for how much to allocate for specific items in your personal budget. For instance, it is often said that a consumer should set aside 10% of their income towards savings and/or investing. For some this will work just fine, for others (such as those of us who did not save enough early in our working life), this amount may be too small. The truth is there is no definitive answer to the question of how much should you spend and save. Your budget allocations will depend on your personal goals,  circumstances, and stage in the life cycle. However, it may be helpful to consider some general guidelines and national consumer trends before you dive in and evaluate your own budget.
Housing: The guideline is to keep the amount spent for  housing expenditures (mortgage loan principal & interest, taxes, and insurance) to about 25-29% of your income. Insurance and tax expenses tend to increase each year. So if housing expenses start off at a high percentage of income they may increase to an unaffordable level if your salary does not keep pace.
 Transportation: The 2011 Consumer Expenditure (CE) survey reported that US consumers on average spent about of 16.7% of their income on transportation. This included gasoline and other transportation related expenses.
Food: In 2011, spending on food averaged about 13.0 % of income. This included 7.7% for food at home and 5.3% for food away from home.
Debt: The general rule is that non-mortgage debt repayments should consume 15% or less of take-home income. 
Planned Saving: As mentioned, there is a general 10%  rule of thumb. But if debt repayment is a priority you may need to allocate more for debt and less for saving. The key point is to find a savings amount that is achievable and making this a regular fixed allocation.
The goal with budgeting is to cover all the necessary allocations and some non-discretionary items such as entertainment and vacations. High spending in one area may necessitate reductions in other areas.

Credit Scores

A credit score is a numerical ranking of your credit history. That history is built when you start using credit and your account information is reported to one or all of the 3 credit reporting agencies. These agencies compile information sent to them into a report.  Each agency compiles a report so you actually have 3 credit reports. Items found on your reports include credit card accounts and installment loan accounts. Utility and rent payments are not reported unless you are involved in a special pilot program or those accounts are in collections.
The credit score is derived by inputting information from your credit reports into a scoring program.  There are 2 factors found in reports that have the most impact on your score. They are payment history and debt utilization. If these 2 factors are good than your credit score is likely to be fine.
A good payment history means building a long history of paying as agreed. A payment needs to be 30 or more days late before it is reported. One 30-day late payment will cause your score to drop in points. However, if it is just a onetime occurrence the effect is not likely to be severe. If you have a history of late payments the effect will be more significant. Making a payment 90 days late will have a greater negative impact than being 30 days late. Defaulting on loans, accounts in collections, and settling loans for less than you owe are all actions that will also cause a very significant drop in your credit score.
Debt utilization is the amount you owe compared to the amount of credit that has been extended to you. For instance if you have a credit card with a $1,000 balance and your current balance is $100, than your debt utilization is 10%. For credit cards it is best to keep your debt utilization below 30%. Even if you pay the balance in full each month, debt utilization should be kept below 30%. In addition, paying off or paying down loans can help build a credit score.  Even if you pay bills on time, high debt utilizations (also known as being maxed-out) can cause your score to drop.
A good article titled “Blunders That Can Ding Your Credit Scores” can be found on the America Saves web site at http://americasaves.org/blog/588-blunders-that-can-ding-your-credit-scores .

Three Steps to Protect Your Identity

The data breach at Target has been much in the news. It highlights the fact that once our personal data is collected we have limited control over who gets access. So as the saying goes, control what is in your power. Below are three steps you can take to protect your credit information. 1. Monitor and check all account statements at least once a month. By federal law you can not be held  liable for more than $50 in fraudulent credit card charges. Most creditors are likely to waive all charges, but you need to report the unauthorized charges. For debit cards, how much of the unauthorized charges you are liable for depends on how quickly you report the incident. Most banks will work with you.
2. Order your free credit reports annually from www.annualcreditreport.com . This is the only federally authorized site to get a free report.
3. Consider putting a security freeze on your credit  reports. The freeze stops access to your credit reports without your authorization. This stops a potential thief from opening new accounts in your name, but there are advantages & disadvantages. For more information about security freezes, visit our web site http://hillsborough.ifas.ufl.edu/tampa-bay-saves and click the hot topics link in the financial management section.

EPF Announced 6.35% Dividend for 2013

The Employees Provident Fund (EPF) announced dividend rate of 6.35 percent for the financial year ended 31st December 2013 after obtaining approval from Minister of Finance. It was the highest since year 2000 and 0.2% higher than 6.15 percent announced in 2012.
Kindly refer to “Historical Employees Provident Funds (EPF / KWSP) Dividend Rate” page for EPF dividend rate table & chart since 1952. You may want to compare it with by using EPF Dividend Calculator.
The total dividend payout stand at RM31.20 billion from RM35 billon investment income.  The remaining are used for investment expenses, operating expenditures, statutory charges and net impairment allowance on financial assets. The payout representing an increase of 12.81 per cent compared to RM27.45 billion recorded in 2012.

Equities emerged as the largest contributor to the EPF’s gross investment income in 2013, generating RM19.52 billion of income, a significant increase of 40.39 per cent compared with RM13.90 billion recorded in 2012.
EPF total investment assets as at 31 December 2012 stood at RM526.75 billion surpassing the half a trillion mark, up 12.31 per cent from RM469.04 billion recorded in the previous year. This increase was largely contributed by the positive net annual contributions from members and employers as well as consistent and encouraging investment performance across all asset classes.
For those who have EPF i-Akaun, you may see the dividend was already credited to your account. Alternatively, members could obtain their EPF account statement from the EPF kiosks or at any EPF branch starting from 17th February 2014.

The Market Missed This Or Under Appreciated The Multiplier Effects

When I did my weekly Murasaki Masterclasses, many were not able to pinpoint what I regarded was a most important development over the past week. Below was a decent blurb from Arab research:

The Star reported that SapuraKencana Petroleum, Hibiscus Petroleum, Sona Petroleum, CLIQ Energy and Coastal Energy are interested to bid for US-based Murphy Oil Corp’s proposed sale of a 30% stake in its Malaysian oil & gas assets, which could be worth US$2bil-US$3bil (RM6.6bil-RM9.9bil). The indicative market value translates to up to 3.3x the US$898mil (RM3bil) acquisition value of Newfield’s Malaysian assets by SapuraKencana, which was completed recently.

 

Murphy currently has majority interests in five separate production sharing contracts – Block K, Block H, Block SK309, Block SK311 and SK 314, as well as three gas holding agreements in Block PM311. In 2012. Murphy’s Malaysian assets generated revenue of US$2.4bil and operating profit of US$894mil. As at 31 Dec 2012, its assets were worth US$4.8bil, with oil reserves of 95.7mil barrels of oil and natural gas reserves of 357.6bil cubic feet.

 

Murphy holds an 80% stake in the Kikeh field, Block K offshore Sabah, which is Malaysia’s first deepwater production field, and is one of Murphy’s key assets. Other significant assets are the shallow oil fields in Block SK, Sarawak, and the yet-untapped Block H, where Petronas is planning to deploy its second floating liquefied natural gas vessel (FLNG) in the Rotan field by 2018. The engineering, procurement, construction, installation and commissioning job for the Rotan FLNG has been awarded to a consortium of JGC Corp and Samsung Heavy Industries Co Ltd.

 

One of the interested bidders are Houston-based Coastal Energy Co, a firm linked to Malaysian investor Taek Jho Low. Coastal Energy has interests in upstream blocks in Thailand and Malaysia, including a 70% stake in the Kapal, Banang and Meranti (KBM) cluster of marginal fields. Petra Energy Bhd owns the remaining 30% stake in the KBM field.

 

Amongst the Malaysian operators, only SapuraKencana appears to be sufficiently capitalised to take on Murphy’s assets. But this would not be an easy contest as we expect other international players such as Shell and Exxon Mobil to enter the fray.

 

My comments:

a) the size of the assets are significant, its almost as if another Petronas has decided to hive off marginal oil fields - its as significant

b) these are Murphy Oil's assets which may be deemed as "pre-qualified" thus elevating their attractiveness

c) I do not think Murphy is exiting but rather concentrating on "bigger things" with the big boys

d) I do not think the assets will end up with foreign parties as I see a deeper agenda

e) A new light has shone on SPACs looking for decent assets, no need to scrounge off Indonesian waters, to that end the fortunes for Sona, CLIQ and upcoming oil and gas SPACs have brightened

f) The last year and a half saw numerous listed counters benefiting from Petronas marginal oil fields strategy - this is as significant if not more so

g) However, I do not see these assets going to the same parties who have benefited last year, I think its a strategy from the top to farm out these assets to a more diversified base thus boosting the breadth and depth of the local oil and gas players

h) I don't think SapKen will get it as it does not make much sense, especially since they can already go regional and even global, its pretty obvious the strategy is to broaden the number of players

g) SONA, CLIQ and some of the upcoming players such as TH Heavy, Scomi group of companies, Yinson may a better chance

h) the "rush" for some of the local smaller oil and gas operators to go via RTO may be a strong indication of the need to tap capital markets to bid for such assets )e.g. Barakah and the recent on=off PDZ deal)

i) overall its a very significant multiplier effect on the overall markets, read it however you think I meant it be

How Much Life Insurance Do You Need?

Do you have enough life insurance to provide for your family if something happened to you? Protecting your family is important, but you also need to avoid spending extra money on insurance that is needed for other purposes. The key is to find the right balance. The amount needed depends on your situation and usually fluctuates throughout the life cycle. If you have dependent children, life insurance is most likely a necessity. If you are single with no dependents and have other assets to cover funeral expenses and outstanding liabilities you may need little or no coverage. Divorced couples may want to consider carrying a policy on the ex-spouse if he or she depends on that person for child support.
Consider the following questions when estimating your life insurance needs:

• How much will my family need to meet immediate needs such as funeral expenses and outstanding debts such as a mortgage?
• How much will my family need to sustain their standard of living?
• How much is needed for long-term expenses such as college for children?
• What financial resources such as investment assets, Social Security survivor benefits, and other life insurance policies would be available to meet these expenses?

For additional information read the publication “An Overview of Life Insurance” which discusses different types of life insurance http://edis.ifas.ufl.edu/fy1393

From Barbarians to Beggers at the Gate: Revisiting the Kodak Patent Sale Debacle

I have on various occasions discussed the saga of the Kodak patent portfolio and how a valuation of $4.5 billion for only part of the portfolio ended up in a sale and licensing of just above $500 million. Explanations have been sought to explain this colossal drop from the multibillion dollar estimate in late 2011 to a payout of only a fraction thereof within less than a year. An interesting attempt to provide answers has been offered by Mark Harris, a journalism fellow at MIT. Entitled “The Lowballing of Kodak’s Patent Portfolio”, here, and brought to my attention by the ever-helpful Patents Analytics group on LinkedIn, the piece is well worth a full read. Permit me to provide the highpoints of the article.

Even as Kodak sank deeper and deeper in its competition with Fuji and others, it continued to engage in innovation, spending nearly $500 million yearly. In so doing, it came up with inventions such as the megapixel camera. By 2012, Kodak had assembled a portfolio of 22,000 patents in 160 countries and earned more than $3 billion in licence fees between 2003 and 2011. As bankruptcy loomed, the company saw the sale of some of its patents as the way back to reinventing the company as a commercial packaging and printing enterprise.

The anticipation that its patent portfolio would fetch a reasonable sum seemed reasonable in light of the sale of the Nortel portfolio for $4.5 billion and Google’s expenditure of over $12 billion for acquisition of the Motorola Mobility business and patents. Consultants chimed in with estimates ranging from between $1.8 billion and $4.5 billion for the Kodak portfolio, against the backdrop of what should appear obvious—“patents are unique and idiosyncratic assets.” In particular, in July 2011 Kodak hired 284 Partners, here, who had been the consultants in the Nortel transaction, to advise Kodak. Focusing on 1,730 patents, the company employed a discounted cash-flow analysis, here, to estimate their value via licensing and litigation, if required. Based on this analysis, it came up with a cash flow of $3.07 billion from 2010 to 2020, with a net present value of between $2.2 billion to $2.6 billion.

Kodak relied on that estimate and proceeded to seek purchasers for the patents via an auction against the back drop of ongoing multiple litigation. Unfortunately, two weeks before the auction was set to commence, the US International Trade Commission ruled invalidated a key patent that led to a reduction in the estimated value of its portfolio to around $1.4 billion. This downward trajectory became much more pronounced when only two bids were made, the higher of which was only $250 million dollars. This amount was less than the company needed to secure loans that it had arranged for the company.

Harris goes on to explain thus:

"The potential bidders, it turned out, had organized into two camps. In one, Adobe, Apple, Facebook, and Microsoft formed a consortium led by Intellectual Ventures. In the other, RPX mustered Amazon, Google, HTC, Samsung, and the photo-printing website Shutterfly. Each participant in such a consortium gets to keep a share of the patents and a license for the rest. The cost to each is relatively low, and all gain the protective power of the entire portfolio".

At the point, as the court allowed the auction to continue, Intellectual Ventures, here, and RPX, here, perhaps the two most prominent patent aggregators (although each with a quite different business model), put together what Harris called “a superconsortium”. The two existing consortia merged and added three additional members-- Fujifilm, Huawei and RIM, with a combined market capitalization at the time of $1.5 billion (more or less the GDP of Australia). It was November 2012 and the parties reached their High Noon, here, moment. Kodak needed more money than what was being offered to secure financing of $793 million, namely such financing being contingent on Kodak raising at least $500 million from its patent portfolio. The result—the superconsortium offered $527 million in exchange for payment of $94 million for the patents under negotiation plus $433 million in licensing fees for tens of thousands of Kodak patents that had not previously been on the negotiating table (plus the mutual dropping of legal cases against each other). To put the $94 million amount in perspective: it was 4% of the initial valuation given by 284 Partners. As Harris notes, the deal was monopsony (monopoly power by the buyer) gone wild.

The reader is invited to read the Harris piece in its entirely but, even after a careful perusal, two comments remain. First, there is the question is the role of investment banks, especially in connection with the early estimates that proved to be delusionally oversized as a matter of market dynamics (though there is some question whether this particular market was distorted by anti-competition law forces). Did the banks contribute to an environment that was conducive to bubble-like estimates in the value of the portfolio? Second, is the discounted cash-flow analysis still defensible or have we reached a stage where top financial minds need to come together with IP types to develop a more valid and reliable measure of patent portfolio valuation?

Finally, for those of you too young to remember Barbarians at the Gate, see here.

Does -- or should -- expensive rebranding add value to the brand?

According to recent news pieces here and here, United Biscuits is relaunching its McVitie’s biscuit brand in what is a £12 million marketing project. The campaign “aims to evoke ‘the emotional role biscuits play in our lives” and means that all United Biscuits sweet products (with the exception of Go Ahead!) will be brought under the McVitie’s brand. This will include Penguin Bars and Jaffa Cakes.

An interesting aspect of this is that 90% of UK households purchased the company’s branded biscuits in 2012 and it currently holds 40% of the market.

So, what we have is the expensive rebranding of an already hugely successful brand. From a trade mark valuation perspective, a thought-provoking (it is hoped) question pops up: Does or can such rebranding add monetary value to the trade mark?

Readers of this blog are well aware that IP valuation is very much a subjective exercise, dependent significantly on the purposes of the valuation. While most of the valuation methods rely significantly on the market performance of the branded goods, some others attach significant importance on the investment placed on the brand, i.e, entail a cost approach. Within this prism, a significant investment on the brand should inevitably add to its value.

Truth be told, the cost approach is not typically relied upon when determining a brand’s value, but it is mostly regarded as a tool to inform or even validate other approaches. But even then, the amount of money poured in to freshen up the brand will still be part of the equation leading to its value determination. Therefore, expensive rebranding does add value to the brand, from an IP valuation perspective. But should it really? Isn’t investing a risk? And what if loyal consumers of the McVitie’s brand don’t ‘bite’? After all, they are already loyal and the brand does extremely well in the UK. Could this be an example “exposing” the artificial nature of IP valuation?

A big thank-you goes to our friend Nikos Prentoulis for preparing this item for IP Finance.

Tools to Compare College Costs

According to the College Board’s 2012 report at  www. trends.collegeboard.org, the average 2012-2013 cost for tuition and fees at public four year colleges and universities is $8,655 and $29,056 at private four-year non-profit universities. The report also states that tuition has risen about 27% higher than inflation over the last six years. While college may be costly, it still offers graduates higher earning potential than non-graduates, making it a reasonable goal for many. As with any major investment, it’s best to do research and compare options. Luckily, available online tools enable side-by-side comparison of costs, types of academic programs, graduation rates, and other important factors.
The National Center for Education Statistics provides the online College Navigator at http://nces.ed.gov/collegenavigator. This tool allows you to input the  names of specific schools (or even criteria)  to build a list of schools and obtain side-by-side comparisons.
The Consumer Financial Protection Bureau’s new database, www.consumerfinance.gov/paying-for-college, helps build a customized college financial aid shopping sheet. This database allows cost comparisons, options to pay those costs, and projected debt levels at graduation.
The College Affordability and Transparency Center at  http://collegecost.ed.gov offers links to additional comparison tools, such as the College Scorecard and the Net Price Calculator.
Purchasing a college education can indeed be the key to unlocking earning and intellectual potential! But do shop carefully and realistically to avoid buyers regret and too much debt.